The complaint documents associated with the latest swoop on those allegedly dealing inside make it abundantly clear the FBI has made very extensive use of co-operating witnesses.

In particular, there is bound to be speculation on the identity of someone referred to as “CS-1,” who has been helping the authorities for more than a year.

Consider the below, from the SEC’s amended complaint:
CS-1 is an individual who, while working at a hedge fund, executed securities transactions based on material, nonpublic information. CS-1 has agreed to plead guilty to charges of conspiracy and securities fraud in connection with this conduct and to cooperate with the government in the hope of receiving a reduced sentence. CS-1 has been cooperating with the FBI since in or about July 2007. The information CS-1 has provided has been corroborated by, among other things, trading records, pen register data , and telephone records.

A pen register, by the way, is a device for recording numbers dialled on a phone or data sent over the web.

Some of those accused were clearly concerned that they might be under surveillance – hence the widespread use of pay-as-you-go mobile phones.

But suspicions fell on the wrong person. As this extract from the complaint shows, the “rat” was thought to be someone who the authorities have yet to name or charge – referring to this person simply as “CC-1″:

CC-1, according to the complaint, is “an individual with a certain nickname who is a co-conspirator not named as a defendant herein…”

Who could that be?

Mail us at alphaville@ft.com if you have an idea.

Ditto the mysterious “portfolio managers at two hedge fund advisers” contained in one SEC document. The accused might be feeling a little sore given that these two individuals — referred to as “Hedge Fund Adviser 1″ and “Hedge Fund Adviser 2″ — tended to make the most money in the suspect trades.

Here’s the table for the Avaya takeover in June 2007:

And here’s tabel for the 3Com takeover in September, 2007:

And finally, for Axcan in November 2007:

Related links:
FBI makes more arrests in Galleon case – FT
A Galleon gallery – collection of SEC documents in the Long Room

This entry was posted by Paul Murphy on Thursday, November 5th, 2009 at 19:32 and is filed under Capital markets, Hedge funds, People. Tagged with FBI, Galleon. Edit this entry.